Robots are taking over the world.
At least, that’s how it seems these days. From driverless cars navigating via Google maps to factories that make cars via nearly 100% robotics, the trend toward automation, computers and the replacement of the human being is a trend that’s here to stay.
Unfortunately, that trend also is invading the financial advisory business, and it’s doing so in the form of so-called “robo-advisors.”
These robo-advisors are basically computer programs designed to give financial advice to clients based on factors such as income, age, retirement goals, assets, etc.
The idea makes sense on paper, as smart computer scientists—with the help of tried-and-true financial planning wisdom—have been able to design a sort of plug-and-play advisory model that generally makes sense.
Of course, it also costs a lot less than having a real-life, smart person on the other end of a phone line.
Yet there are many problems with robo-advisors, and one of the biggest is that when it comes down to it, no robot is going to understand a person’s individual financial struggles.
Stated differently, no robot can have empathy for a client the way an actual RIA or FA can, and no robot is going to understand that for most people, their monetary goals and what it will take to get there aren’t just a matter of plugging in to some financial matrix.
For example, can a robot have any idea at all about how much it means to an investor to make enough money to send their only child to medical school?
Does a robot have any idea that generating enough income from your assets to go out and do missionary work in your sixties is what you’ve wanted to do all your life?
Can a robo-advisor understand that you came from nothing, worked 100 hours per week on your small business so that you could retire at 50 with a few million dollars, and then be able to take your RV across country and visit every state in the union?
Of course, the answer is “no way.”
But you know who can empathize with these situations?
It’s called a real-life RIA or FA just like you.
Now, make no mistake about it. Robo-advisors do have a lot of things that you as an RIA or FA don’t have. They can crunch numbers at any hour of the day, right on a client’s smartphone. They also can give clients quick answers about asset allocation, types of asset classes, and historical rates of return.
Yet what you have that a robo-advisor doesn’t is the ability to listen to a client or prospect, and make them understand that you have empathy for their cause.
In short, you have a conscience and a sense of human understanding that a robot doesn’t have. But in order to put this human element to work for you, you actually really do have to care about your clients.
Now most of you do, in fact, care a lot about your clients. However, I’ve met a lot of RIAs and FAs in my day, and some just give the impression that they are doing their clients a favor by letting them invest with their firm.
That’s the absolute wrong approach, and it’s this attitude that’s largely responsible for the rise of robo-advisors in the first place.
So, if you want to distinguish yourself from a robo-advisor, be someone who actually does care about clients, someone who takes a genuine interest in your clients and prospects, and someone who can empathize with their goals and ultimate life aspirations.
If you lack this real sense of empathy, well, you’re no better than a robot.